Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019?

bddzz8j13 — Sun, 02 Feb 2020 17:09:40 GMT

Re: Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019?

Hal_Al — Sun, 02 Feb 2020 17:55:23 GMT

No known bug. Although a state refund is usually fully taxable, for those who itemize, it's not always so. This is less so, since the SALT limit was imposed in 2018*. Look at the "State and local income tax refund worksheet" (abbreviated "St refund wks" on the forms list) for details.

* Any refund you get is offset by the excess deductions you weren't allowed to take.

Re: Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019?

bsebse — Fri, 01 May 2020 22:58:01 GMT

I am having the opposite problem. Turbo Tax is forcing me to report my 2018 refund in 2019 when I did not deduct that tax payment in 2018.

Basically, in 2018 I declared 18,000 in SALT deductions of which only 10,000 was deducted. I received a $5000 refund, which means I still have 12,000 in SALT deduction which is over the 10,000 number. So, I never deducted that $5000 refundable tax payment in the first place and therefore I should not be taxes on that refund according to this IRS clarification:

https://www.irs.gov/newsroom/with-new-salt-limit-irs-explains-tax-treatment-of-state-and-local-tax-refunds

In one example described in the ruling, a single taxpayer itemizes and claims deductions totaling $15,000 on the taxpayer’s 2018 federal income tax return. A total of $12,000 in state and local taxes is listed on the return, including state and local income taxes of $7,000. Because of the limit, however, the taxpayer’s SALT deduction is only $10,000. In 2019, the taxpayer receives a $750 refund of state income taxes paid in 2018, meaning the taxpayer’s actual 2018 state income tax liability was $6,250 ($7,000 paid minus $750 refund). Accordingly, the taxpayer’s 2018 SALT deduction would still have been $10,000, even if it had been figured based on the actual $6,250 state and local income tax liability for 2018. The taxpayer did not receive a tax benefit on the taxpayer’s 2018 federal income tax return from the taxpayer’s overpayment of state income tax in 2018. Thus, the taxpayer is not required to include the taxpayer’s 2019 state income tax refund on the taxpayer’s 2019 return.

Turbo tax did do it correctly until I went to file the taxes and then it forced me to hand enter the 5000 from the 1099-G into the schedule c during the check. Now won't let me remove it. This seems like a bug to me.

topic Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019? in State tax filing

Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019?

Re: Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019?

Re: Is there a bug with 1099G for state tax refunds? 2018 - amount was part of itemized deductions so state tax refund should be taxable in 2019?